CoTec Holdings Corp. has announced that it has entered into an agreement to acquire a 15.8% equity interest in MagIron LLC for a US$2 million. MagIron is a U.S. based company that is in the process of acquiring a green iron ore project that it intends to refurbish and bring back into production. The investment includes terms customary for an investment of this nature, including Board representation subject to CoTec maintaining a 10% equity interest.
MagIron has entered into a purchase agreement for the acquisition of a dormant iron ore concentrator known as Plant 4 based in Grand Rapids, Minnesota and 2,483 acres of land in the Itasca and St. Louis Counties, Minnesota that contains fine and coarse iron ore tailings. MagIron will also lease a further 1,700 acres of land which houses Plant 4 and facilitates access to additional iron ore fines and tailings. This waste material from historical mining operations nearby Plant 4 can be used as feedstock for Plant 4 and could potentially support an estimated 15-year business plan. MagIron is acquiring Plant 4 from the Chapter 7 Trustee for ERP Iron Ore, LLC pursuant to the terms of an order of the United States Bankruptcy Court for the District of Minnesota for a purchase price of US$4.5 million. MagIron will also provide a royalty of US$2 per dry metric tonne of concentrate produced capped at US$15.5 million to settle the claims of certain lienholders over the property.
CoTec understands that MagIron intends to restart the operations at Plant 4 following completion of a refurbishment program, which is currently anticipated to take approximately 24 months and cost approximately US$80 million. MagIron’s ability to complete the refurbishment program and restart operations at Plant 4 will be subject, among other things, on its ability to secure additional funding sufficient to fund the refurbishment program and the restart.
MagIron has also entered into a purchase agreement for intellectual property related to the iron ore concentrate process for a cash payment of US$325,000 and a royalty of US$2 per dry metric tonne of concentrate produced by Plant 4, capped at US$10 million. The intellectual property utilizes the patented Natural pH Flotation Process, patented magnetic separators and proprietary plant designs combined with common mineral processing techniques controlled with proprietary automation software to separate hematite, goethite and limonite from non-magnetic minerals (primarily silica) to yield ultra-high grade iron ore. The intellectual property allows for the efficient production of fine-grained iron ore concentrate with a silica content of approximately 2%. The Rev3 Separator also results in lower downtime due to its simple carousel design and discrete matrix media that allows for the free flow of material that prevents plugging and clogging, resulting in overall improved efficiency.
Following its restart, Plant 4 is expected to be able to produce DR grade iron ore concentrate at a reduced carbon footprint compared to traditional steel production techniques as it will recycle existing tailings rather than require new mining. In addition, MagIron is testing technology developed by Binding Solutions Limited, another CoTec portfolio investment, to see if it could be utilized at Plant 4 and the initial results are encouraging. If successful, the BSL technology would allow for the use of cold agglomeration in the production of green iron ore pellets from Plant 4. These pellets could be used in direct reduced iron and electric arc furnace applications at a significantly reduced carbon footprint compared to existing alternatives.
Courtesy of Cotec Holdings Corp.